Moody’s Expects Govt To Keep Fiscal Deficit At 3.5 %.

Moody’s expects govt to keep fiscal deficit at 3.5 %. International rating agency Moody’s has said it expects that the government will cut spending to maintain deficit broadly in line with 3.5% of GDP. Moody’s forecast stable GDP growth for India at around 7.5% in 2016 & 2017. It says India relatively less exposed to external factors, including a slowdown in China and global capital flows. The agency estimates that inflation will rise from last year’s levels (4.9% on average) but will fall back to the central bank’s target of 5% by early 2017. The statement comes amid raging debate in the country over yet another relaxation in fiscal deficit target for 2016-17, pegged at 3.5%. The Narendra Modi-led NDA government had changed the fiscal consolidation plan last year and though many economists support another tweak others oppose it.

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